November 27, 2016
Indian Prime Minister Narendra Modi in his first 'Mann Ki Baat' after the demonetization drive cited Kenya's M-Pesa as an example of how an economy can move towards being a cashless society.
November 27, 2016
Indian Prime Minister Narendra Modi in his first 'Mann Ki Baat' after the demonetization drive cited Kenya's M-Pesa as an example of how an economy can move towards being a cashless society.
M-Pesa is a mobile-phone based money transfer and banking service that was first introduced by Vodafone in Kenya. The M in M-Pesa stands for mobile, while PESA is the Swahili word for money.
M-Pesa is often called the most successful mobile phone-based banking service in the developing world. It was first introduced in Kenya by Vodafone for Safaricom in 2007.
According to Safaricom, M-Pesa has "revolutionized the way Kenya does business". M-Pesa was envisioned as a service that would help small businesses use their mobile phones to get loans and allow for microfinance-loan repayments.
How does M-Pesa work? You can use your mobile phone to deposit money in your account, send money, withdraw cash, check your balance and do a host of other banking and financial operations with the help of M-Pesa.
The transactions are protected by One-time PINs. Additionally, you can pay for goods and services, helping develop a cashless society.
Users are normally charged a small fee for transactions and other services that M-Pesa offers. The whole process is streamlined with the help of "banking agents" at retail outlets (in India that could mean kirana store owners) and mobile service providers.
These agents act as the point of contact from where customers can withdraw and deposit money. In short, M-Pesa acts as both a payments platform and your personal bank account.
While a lot of mobile banking platforms are coming up across the world and India, M-Pesa is normally seen as an exemplary service, given the way it changing Kenya's banking.
Vodafone has also launched M-Pesa in India in a tie-up with the ICICI Bank. M-Pesa has been hailed worldwide as a seamless service and interestingly The Economist had in 2013 said that it is easier to pay for a taxi ride using your mobile phone in Nairobi than in New York.
The system worked wonders for Kenya because the cost of transporting cash in the country was otherwise very high. According to The Economist, the M-Pesa system is very useful because it allows workers in the cities to send money back to their families in the rural areas. No wonder that PM Modi spoke of M-Pesa as an example from which India can emulate!
Courtesy: Financial Express
